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Title III — Improving coverage under tax-preferred health accounts

S. 12 · 116th Congress · Jan 3, 2019 · Lineage

III Improving coverage under tax-preferred health accounts

Sec. 301 Allowance of distributions for prescription and over-the-counter medicines and drugs

(a)
HSAs— Section 223(d)(2)(A) is amended by striking the last sentence thereof and inserting the following: “Such term shall include an amount paid for any prescription or over-the-counter medicine or drug.”.
(b)
Archer MSAs— Section 220(d)(2)(A) is amended by striking the last sentence thereof and inserting the following: “Such term shall include an amount paid for any prescription or over-the-counter medicine or drug.”.
(c)
Health flexible spending arrangements and health reimbursement arrangements— Subsection (f) of section 106 is amended to read as follows:

“(f) Reimbursements for all medicines and drugs—For purposes of this section and section 105, reimbursement for expenses incurred for any prescription or over-the-counter medicine or drug shall be treated as a reimbursement for medical expenses.”

(d)
Effective dates—
(1)
Distributions from savings accounts— The amendments made by subsections (a) and (b) shall apply to amounts paid in taxable years beginning after December 31, 2019.
(2)
Reimbursements— The amendment made by subsection (c) shall apply to expenses incurred in plan years beginning after December 31, 2019.

Sec. 302 Purchase of health insurance from HSA account

(a)
In general— Paragraph (2) of section 223(d), as amended by section 301, is amended—
(1)
by striking “and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual” in subparagraph (A) and inserting “any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, and any child (as defined in section 152(f)(1)) of such individual who has not attained the age of 27 before the end of such individual's taxable year”;
(2)
by striking subparagraph (B) and inserting the following:

“(B) Health insurance may not be purchased from account—Except as provided in subparagraph (C), subparagraph (A) shall not apply to any payment for insurance.”

(3)
by striking “or” at the end of subparagraph (C)(iii) and by striking subparagraph (C)(iv) and inserting the following:

“(iv) an HSA-qualified health plan, or

“(v) any health insurance under title XVIII of the Social Security Act, other than a Medicare supplemental policy (as defined in section 1882 of such Act).”

(b)
Effective date— The amendments made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date.

Sec. 303 Special rule for certain medical expenses incurred before establishment of account

(a)
In general— Paragraph (2) of section 223(d) is amended by adding at the end the following new subparagraph:

“(D) Treatment of certain medical expenses incurred before establishment of account—If a health savings account is established during the 60-day period beginning on the date that coverage of the account beneficiary under an HSA-qualified health plan begins, then, solely for purposes of determining whether an amount paid is used for a qualified medical expense, such account shall be treated as having been established on the date that such coverage begins.”

(b)
Effective date— The amendment made by this section shall apply with respect to coverage beginning after the date of the enactment of this Act.

Sec. 304 Preventive care prescription drug clarification

(a)
Clarify use of drugs in preventive care— Subparagraph (C) of section 223(c)(2) is amended by adding at the end the following: “Preventive care shall include prescription and over-the-counter drugs and medicines which have the primary purpose of preventing the onset of, further deterioration from, or complications associated with chronic conditions, illnesses, or diseases.”.
(b)
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2019.